Conceptualizing the Firm: The Polyphonic Organization

Examination of the environmental and organizational effect of EMSs such as ISO 14001 requires consideration of three key questions. First, what are the factors that cause firms to adopt an EMS? Second, how does the adoption of an EMS affect the internal structure and dynamic of certified organizations and the attitudes and beliefs of the individuals working in them? Finally, what effect do these systems have on the environmental performance of the organizations that adopt them, and what are the organizational mechanisms that generate these effects?

In addressing these questions we draw on an institutional conception of the firm that we term the polyphonic model.Footnote ³ The polyphonic model conceptualizes the firm as a complex social system that cannot be described by means of a single and temporally stable narrative (e.g., profit maximization).Footnote ⁴ According to the polyphonic model, firms and other organizations are depicted as dynamic, self-organized decision-processing systems, which can accommodate multiple logics. The calculative logic of profit maximization, while important, constitutes only one of these co-occurring logics. By postulating the firm as a pluralistic entity, the polyphonic model seeks to respond to the puzzle posed by March and Olsen regarding the way in which the logics of “consequences” and “appropriateness” interact in different institutional contexts (Reference GoldmannGoldmann 2005:43; Reference March and OlsenMarch & Olsen 2004:19).

The polyphonic model draws on two main theoretical pillars: Luhmann's communication-based theory of social systems (Reference LuhmannLuhmann 1995, Reference Luhmann2000) and Nelson's concept of “social technologies” (Reference Nelson and SampatNelson & Sampat 2001; Reference NelsonNelson 1991). In Luhmann's framework, organizations are conceptualized as self-organized systems of communicationsFootnote ⁵ of a special form: decisions; organizations are constituted by a recursive network of decisional communications (Reference Bakken, Hernes, Thorpe and HoltBakken & Hernes 2008).

The organization's structure consists of various decision premises or programs (Luhmann) or social technologies (Nelson), which constitute necessary preconditions for making a decision. Luhmann distinguishes between several types of programs (Reference MartensMartens 2006:89–94; Reference Seidl and BeckerSeidl & Becker 2006:24–9). First, there are decision programs, which in turn include goal-selection programs, execution/conditional programs (that determine what to do under varied conditions), and cognitive programs (which are responsible for the generation and ordering of information). Second, there are personnel programs, which determine how new employees are selected and assigned to different posts. Finally, there are structural programs that determine the organization's hierarchy and meta-structural programs that deal with the meta-questions of a possible redesign of any of the foregoing decision premises. These various programs may invoke diverse logics and criteria as antecedents for reaching a decision.

Nelson adopts a similar conceptual vocabulary in his analysis of organizations, highlighting the role of routines in the firm's structure. Nelson characterizes firms in terms of a synthesis between strategy, structure, and core-capabilities. Strategy “connotes a set of broad commitments made by a firm that define and rationalize its objectives and how it intends to pursue them” (Reference NelsonNelson 1991:67). The structure and core-capabilities of a firm are defined in terms of organizational routines and decision procedures. Routines guide the behavior of the agents using them, forming what Nelson defines as “social technology” (Reference Nelson and SampatNelson & Sampat 2001:42–7).Footnote ⁶ The collection of decision premises or social technologies—both formal and informal—associated with a certain organization constitutes its unique structure or culture.

Like Luhmann, Nelson adopts a pluralistic vision of the firm, recognizing that the firm's goals and routines may be associated with a multiplicity of logics. Nelson argues in that spirit that the firm's strategy may be a product of faith and company tradition and not just calculation. Further, there is no reason to argue a priori that the firm's strategy will be in fact “optimal or even not self destructive” (Reference NelsonNelson 1991:67).Footnote ⁷

The concept of polyphonic organization also sheds light on the dynamic of organizational life and the causes of institutional innovation. The polyphonic model is based on the idea of a viable dynamic equilibrium. It is viable in the sense that while it is hypothesized that firms can host a variety of rationalities, only a limited combination of goals and routines offers a viable trajectory for the firm given the external constraints it is facing. Firms can be viable, however, without being economic optimizers. The notion of equilibrium reflects the claim that organizations have a more-or-less stable structure. Finally, the term dynamic reflects several features of the polyphonic organization; first, the idea that firms are network of decisions—they are not static solutions to discrete optimization dilemmas. Second, it emphasizes the idea that the firm's structure is potentially alterable and is subject to continuous internal contestation.

A further critical element of the dynamic of organizational life lies in the reciprocal interaction between the firm's structure and the attitudes and beliefs of the employees. This relationship can be mutually supportive but also destructive. Luhmann makes a clear distinction in this context between the organization and the human agents associated with it. The organization is depicted as an autonomous social entity that interacts with the employees' community in a reciprocal process of structural coupling. In analyzing this reciprocal process, the polyphonic model adopts a pluralistic conception of the self: Human beings are assumed to act on the basis of a wide range of motivations that cannot be explained in narrow materialistic terms or through the notion of self-interest (Reference Frey and StutzerFrey & Stutzer 2006; Reference Rocha and GhoshalRocha & Ghoshal 2006).

Institutional Change and Organizational Citizenship Behavior: ISO 14001 as a Transformative Agent and Equilibrium Anchor

The polyphonic model provides a complex framework for thinking about the causes for certification, the structural impact of ISO 14001, and ISO 14001 environmental efficacy. The polyphonic model argues that the organizational processes underlying these decisions are not governed by a single logic (economic, environmental, or other) but by a multiplicity of logics, whose exact constellation is context-dependent. Drawing on this general framework, we argue that the adoption of ISO 14001 can move the firm into a new equilibrium trajectory, which enmeshes together environmental and economic goals and reflects greater organizational sensitivity to ecological concerns.

Regarding the certification process, the polyphonic model maintains that this process can reflect a wide spectrum of motivations, both instrumental and ideological. Thus, while the polyphonic model recognizes that firms are likely to engage in some sort of cost-benefit calculus regarding the decision whether to implement ISO 14001, balancing, for example, the cost of certification against potential reputational gains, this economic calculus will not determine (necessarily) the firm's ultimate decision.Footnote ⁸ With respect to ISO 14001 institutional impact, we argue that ISO 14001 can trigger a change in the firm's internal dynamic through the various new routines it introduces. These routines ensure that environmental concerns will receive a stronger presence in the firm's decisionmaking process, allowing for the discursive expression of motivations and ideas that may have been suppressed under the previous regime. By creating new routines for selecting, ordering, and processing information, the system also extends the organization's cognitive horizon, enabling the generation of new environmentally related data that would not have been available to the organization beforehand.

By making environmental issues more salient and by imposing a process of continual improvement and reflection, the ISO 14001 system drives the organization to deal with competing (internal) economic and environmental demands and to develop new mechanisms for resolving potential tensions between them. This continuous internal contestation is an important source of technological and social innovation. While this internal tension may exist in uncertified firms, ISO 14001 bolsters this process by giving it permanent structural form. The adoption of ISO 14001 facilitates, then, a shift into a new dynamic equilibrium, in which environmental concerns are given more weight. The third-party certification and auditing system associated with ISO 14001 provides further support to the internalization of ISO 14001 structural requirements (Reference Potoski and PrakashPotoski & Prakash 2006:19; Reference AndrewsAndrews 2001:78–88). The new dynamic induced by ISO 14001 is not determined by the motivations that moved the organization to adopt the standard in the first place (and thus can take place in organizations that are not ideologically “green”).

The viability and resilience of this new equilibrium stems from several sociological and psychological processes, which cannot be understood by viewing the firm, and the interaction between the firm and its employees, solely through the lens of a calculative, economic logic. First, this new equilibrium draws on the reputational benefits of ISO 14001 (Reference Prakash and PotoskiPrakash & Potoski 2006; Reference ReinhardtReinhardt et al. 2008:225–8). Second, it reflects further benefits that are made possible by the new information generated by the system and the innovative drive it unleashes. A good example is efficiency gains generated by new technological or institutional techniques (e.g., new recycling techniques and enhanced energy efficiency). A third source of viability is the virtuous reciprocal interaction that the implementation of ISO 14001 generates between the firm's new structure and its workforce. Finally, the resilience of the new equilibrium reflects the fact that once the organization settles into this new equilibrium state, “going back” through, for example, abrupt decertification, may be costly. These costs reflect both the costs of dismantling the new routines—which become entrenched in the organization's structure—and the adverse effects of breaking the aforementioned virtuous cycle (e.g., damaging the employees' trust in the firm).

One of the key features of the ISO 14001 system is the virtuous cycle it generates between the new organizational reality and the motivations and beliefs of the employees.Footnote ⁹ There is, in this context, an amplifying feedback between the organizational and individual levels. This reciprocal cycle is driven by four key processes.

First, the EMS creates a system of internal organizational norms that operate alongside the external system of statutory norms.

Second, the adoption of a comprehensive EMS can lead—through the emphasis it places on the environmental issue—to the internalization of environmental values in employees who did not previously have a clear position on this issue. It is also likely to strengthen pro-environmental attitudes in workers who are already committed to the environmental cause. We conceptualize the commitment to the environment as an internal, obligation-based, motivation (Reference Frey and JegenFrey & Jegen 1999:4; Reference OsterlohOsterloh et al. 2001:233). Intrinsic motivation should be distinguished from extrinsic motivation, which acts through external incentives (e.g., monetary) and is normally instrumental—that is, aimed toward achieving a specified objective (Reference Ryan and DeciRyan & Deci 2000:71).Footnote ¹⁰

The causal mechanism underlying the internalization process is complex. It reflects the symbolic (legitimizing) value of the organizational decision to adopt the standard (Reference Vigoda and GolembiewskiVigoda & Golembiewski 2001:545), the informative aspect of the certification process (e.g., providing information about the consequences of improper environmental behavior through training, monitoring, etc.), the creation of an explicit framework for placing responsibility for negative environmental behavior, and the creation of an organizational sphere conducive to public expression of the internal stance (Reference NyborgNyborg 1999:420). The structure of ISO 14001, which is based on continuous improvement and not on a rigid system of sanctions, and provides a framework for involving employees in the management of the environmental aspects of the organization's activities, can enhance employees' intrinsic motivation. This effect is facilitated by the EMS's positive influence on employees' perceived competence and on their experienced autonomy (Reference ThøgersenThøgersen 2003:201).

Third, strengthening the environmental commitment of the organization through ISO 14001 certification is also likely to increase the commitment of employees to the organization.Footnote ¹¹ This hypothesis is based on the findings of several studies, which find a positive correlation between corporate citizenship and commitment to the organization (Reference Turban and GreeningTurban & Greening 1997:666; Reference MaignanMaignan et al. 1999:458, 464). Environmentally conscious firms are also likely to be associated with higher levels of organizational citizenship behavior, defined as “individual behavior that is discretionary, not directly or explicitly recognized by the formal reward system, and that in the aggregate promotes the effective functioning of the organization” (Reference PodsakoffPodsakoff et al. 2000:513). Organizational citizenship behavior has been found to be positively correlated with job performance and organizational performance (Reference PodsakoffPodsakoff et al. 2000:537, 541, 543–8; Reference Podsakoff and MacKenziePodsakoff & MacKenzie 1997:142) and with employees' commitment (Reference MeyerMeyer et al. 2002:22, 39).

Fourth, the foregoing processes will support and further entrench the institutional changes instigated by the standard, by increasing the employees' willingness to invoke the new conceptual apparatus introduced by the EMS and to implement its routines.

Cumulatively, the institutional and personal processes described above should positively affect both the environmental and nonenvironmental output of employees in certified firms. The effect of the EMS on the employees' internal norms system and on their commitment to the organization therefore has important economic implications. It unleashes economic resources that were not available in the previous organizational setting. First, by affecting the internally driven (noninstrumental) willingness of employees to engage in pro-environmental behaviors (e.g., recycling, conservation of water and electricity, and greater attention to environmental risks such as leakage of hazardous materials), firms can improve their environmental performance without bearing the full cost of this improvement. Second, the increase in employees' commitment to the organization—reflected in increased levels of citizenship behavior—can contribute to the firm's financial performance. These two processes provide a further explanation for the ability of firms to bear the costs of certification, and achieve beyond compliance targets, without sacrificing profits.

The Polyphonic Model and Other Models of the Firm

How does the polyphonic model differ from the agency cost (or transaction cost) model and stakeholder theory? These rival theories dominate the contemporary corporate governance literature and as such deserve special consideration (Reference AgleAgle et al. 2008).

Consider, first, the models of agency cost or transaction cost. The first difference between these models and the polyphonic model lies in their concept of human agency. The agency and transaction cost models base their policy prescriptions on the idea that self-interested, material opportunism is a primary trait of human agency (Reference WilliamsonWilliamson 1998:31; Reference AllenAllen 1993:1401). This understanding of human motivation disregards the possibility—backed by numerous studies—that managers, employees, and shareholders may be driven by a complex set of motives, which may reflect other-regarding and duty-oriented concerns (e.g., environmental commitment) (Reference Perez and DillingPerez 2008:157–62; Reference RichardsonRichardson 2008:180–5). Adopting a more pluralistic concept of the self challenges the principal/agent problematic that drives these models. Further, this shallow understanding of the self makes the agency and transaction cost models inattentive to the limitations of monetary incentives and hierarchical control as modes of governance. There is ample evidence that hierarchical control and outcome-based incentives may have counterproductive results, such as increasing the distrust between managers and employees and decreasing people's intrinsic motivation (Reference GhoshalGhoshal 2005:85).

A second difference concerns the way in which the agency and transaction cost models conceptualize the firm as a social entity. Both models take a highly reductionist approach to this question, attributing everything that goes within the corporation to individual decisionmaking (Reference ReinhardtReinhardt et al. 2008:227) and disregarding the independent causal influence of the organization's structure. This approach is reflected in the claim that the firm's social structure can be gleaned by enumerating the formal contracts associated with it (Reference WilliamsonWilliamson 1998:35; Reference EisenbergEisenberg 1999). The polyphonic model rejects this reductionist claim, highlighting instead the intricate linkage between the organization's structure and individual action.

The polyphonic model is closer in its approach to stakeholder theory in that both models reject the attempt to ascribe a single goal to the corporation. Nonetheless there are deep differences between the two approaches. First, stakeholder theory is prominently normative. It seeks to provide normative guidance to the firm's managers, arguing that managers “ought to view the interests of stakeholders as having intrinsic worth and should pursue the interests of multiple stakeholders” (Reference DonaldsonDonaldson 1999:238). The stakeholder model thus prohibits the mobilization of the firm's resources to the benefit of any single constituency (such as shareholders) (Reference Donaldson and PrestonDonaldson & Preston 1995:87). The Clarkson Principles of stakeholder management provide a leading example of this facet of stakeholder theory.Footnote ¹² The polyphonic model, by contrast, is not a normative theory. Rather, it takes interest in the way in which different normative orders—both external and internal—influence the firm's dynamic.

But the stakeholder model also makes certain empirical claims about the structure of firms. Thus, for example, Donaldson and Preston describe the corporation as a “constellation of cooperative and competitive interests possessing intrinsic value” (1995:66). And in describing the way in which firms respond to these multiple claims, Reference FreemanFreeman and colleagues argue that firms may develop diverse normative cores (2004:368). The strong pluralistic spirit underlying these claims marks an important common ground between the polyphonic model and stakeholder theory.

However, stakeholder theory does not provide a coherent sociological account of the way in which these competitive interests are manifested in the firm's structure. Stakeholder theorists tend to focus on the way in which stakeholder claims influence managerial decisionmaking (Reference GunninghamGunningham et al. 2004:326–8; Reference Donaldson and PrestonDonaldson & Preston 1995:75). This approach seems lacking in that it fails to give proper weight to the autonomous impact of the firm's institutional structure. The polyphonic model seeks to unfold the way in which corporations—as self-referential communicative systems—reconstruct the claims of different stakeholders (e.g., nature, employees)—according to their self-created programs and routines. It also seeks to shed light on the intricate relationship between the corporate culture and its employees and managers, highlighting the independent causal role of each.

The Empirical Study

The empirical part of the study focuses on one key element of our theoretical framework: the claim that ISO 14001 may transform the firm's internal dynamic in a pro-environmental fashion, generating a virtuous cycle between the firm's new environmentally sensitive structure and the perceptions, attitudes, and beliefs of the employees—toward the environment and the organization. In this context we focused on two key questions: the impact of ISO 14001 on the firm's internal structure and on its ecological commitment and the impact of ISO 14001 on the employees' attitudes toward the organization and the environment. In studying these questions we employed a multimethod research design, using in-depth interviews with executives in combination with structured questionnaires that were administered to employees in certified and noncertified firms.

In analyzing the structured questionnaires and in-depth interviews we have drawn on the following set of hypotheses.

1. 1. The environmental commitment of certified firms, as perceived by their managers, will be higher than that of noncertified firms.

2. 2. The environmental commitment of certified firms, as perceived by their employees, will be higher than that of noncertified firms.

3. 3. Among certified firms, the environmental commitment of the firm, as perceived by the firm's employees, will be higher among employees with a high integration score than among employees with a low integration score.

4. 4. The adoption and implementation of the ISO 14001 EMS is likely to enhance the environmental commitment of employees.

5. 5. An increase in the firm's environmental commitment score, as it is perceived by the firm's employees, will be positively associated with all three organizational citizenship behavior (OCB) indexes. This association will be stronger within ISO 14001 firms than within noncertified firms.

Findings: Quantitative Analysis

To examine our hypotheses about the differences between the conception of the organization's environmental commitment among managers and employees of ISO 14001 and noncertified firms, we calculated a series of multiple linear regression equations, separately for managers (Table 1) and employees (Table 3). We calculated a separate equation for employees of ISO 14001 firms (Table 4). We also conducted a t-test to examine the differences in the indexes of organizational environmental motivation between certified and noncertified firms, as perceived by the managers (Table 2).

Table 1. Linear Regression Estimates Predicting Organizational Commitment to the Environment as Perceived by Managers, Using the ISO 14001 Certification Variable (N=47)

Note: Coefficients are standardized (β). Standard errors in parentheses.

^* p<0.05;

^** p<0.01

Table 2. Differences in the Indexes of Organizational Environmental Motivation Between Executives of Certified and Noncertified Firms (N=47)

^** p<0.01

Table 3. Estimates of the Linear Regression for Predicting the Organizational Environmental Commitment According to the Employees' Perception, Using the ISO 14001 Certification Variable and Environmental Commitment According to the Executives' Perception

Note: Coefficients are standardized (β). Standard errors in parentheses.

^* p<0.05;

^** p<0.01;

^*** p<0.001

Table 4. Estimates for Predicting Organizational Environmental Commitment According to Employees' Perception in ISO 14001 Firms, Using the ISO 14001 Integration Variable and the Environmental Commitment According to the Executives' Perception (N=400)

Note: Coefficients are standardized (β). Standard errors in parentheses.

^* p<0.05;

^** p<0.01;

^*** p<0.001

In the regression equations used for managers, the dependent variable was defined as the firm's environmental commitment as reflected in the environmental commitment index; the independent variable was defined as ISO 14001 certification.Footnote ¹⁴ The specification of the regression model was:

$\text{Environmental}\hspace{0.17em}\text{commitment}\hspace{0.17em}\left(\text{managers}\right)=\beta \text{'}\text{x}+\delta \hspace{0.17em}\text{ISO}\hspace{0.17em}\text{14001}\hspace{0.17em}\text{certification}\hspace{0.17em}+\hspace{0.17em}\varepsilon$

where the x vector included the additional attributes of the firm, the firm's environmental motivation indexes, and a constant (intercept).

We also conducted a t-test for independent samples to compare the managers of the two firms' categories with respect to the environmental motivation indexes (Table 2).

The structure of the variables in the regression equations calculated for the employees was similar to that used for managers: the dependent variable was defined as the firm's environmental commitment as reflected in the environmental commitment index, and the independent variable was defined as ISO 14001 certification (Table 3).Footnote ¹⁵ The specification of the regression model was:

$\text{Environmental}\hspace{0.17em}\text{commitment}\hspace{0.17em}\left(\text{employees}\right)=\beta \text{'}\text{x}+\delta \hspace{0.17em}\text{ISO}\hspace{0.17em}\text{14001}\hspace{0.17em}\text{certification}\hspace{0.17em}+\hspace{0.17em}\varepsilon$

where the x vector included the additional attributes of the firm, the attributes of the employees, the organization's environmental commitment as perceived by the managers, and a constant (intercept).

To examine our third hypothesis, the employees of ISO 14001 firms were divided into two groups according to their integration score. The first group included participants whose integration score was lower than or equal to the median of the entire group (med.=58.04). The average integration score in this group was 41.25 and the standard deviation was 17.67 (N=215, 53.8%). The second group included participants whose implementation score was higher than the median of the whole group. The average integration score in this group was 77.56 and the standard deviation was 11.76 (N=185, 46.3%).Footnote ¹⁶ Next, a multiple linear regression equation was performed. The dependent variable was defined as the organizational commitment to the environment among employees, and the independent variable was defined as the integration of ISO 14001 (as reflected in the integration index).Footnote ¹⁷ The specification of the regression model was:

$\begin{array}{c}\text{Environmental}\hspace{0.17em}\text{commitment}\hspace{0.17em}\left(\text{employees}\right)\\ =\beta \text{'}\text{x}+\delta \hspace{0.17em}\text{implementation}\hspace{0.17em}\text{of}\hspace{0.17em}\text{ISO}\hspace{0.17em}\text{14001}\hspace{0.17em}\text{EMS}\hspace{0.17em}+\hspace{0.17em}\varepsilon \end{array}$

where the x vector included the additional organizational attributes, employee attributes, executive perception, and a constant (intercept).

To examine our fifth hypothesis regarding the OCB indexes, a series of multiple linear regression equations was calculated. The equations were calculated separately for employees of ISO 14001 firms and those of noncertified firms (Table 5). In the regression equations the dependent variable was defined as the OCB measured by the three indexes: OCB–interpersonal behavior, OCB–job performance, and OCB–civic virtue. The independent variable was defined as the firm's environmental commitment as perceived by employees and executives (measured in their respective environmental commitment indexes).Footnote ¹⁸ The specification of the regression model was:

$\text{Organizational}\hspace{0.17em}\text{Citizenship}\hspace{0.17em}\text{Behavior}\hspace{0.17em}=\beta \text{'}\text{x}+\delta \hspace{0.17em}\text{environmental}\hspace{0.17em}\text{commitment}\hspace{0.17em}+\hspace{0.17em}\varepsilon$

where the x vector included the additional organizational attributes, employee attributes, executive perception, and a constant (intercept).

Table 5. Estimates of the Linear Regression for Predicting OCB Using the Organizational Environmental Commitment According to Employees' and Executives' Perception (N=576)

Note: Coefficients are standardized (β). Standard errors in parentheses.

^* p<0.05;

^** p<0.01;

^*** p<0.001

Table 1 shows estimates of the linear regression predicting organizational commitment to the environment as perceived by managers, using the ISO 14001 certification variable. Table 1 shows that the equation for predicting organizational commitment to the environment is significant, the explained variance is 49 percent, and among the predicting variables, the ISO 14001 certification variable alone had a significant positive unique contribution to the explanation (β=0.54). Based upon the beta coefficient and consistent with our first hypothesis, the perception of the firm's environmental commitment among managers of ISO 14001 firms was higher than among managers of noncertified firms.

Table 2 shows averages, standard deviations, and values of t-tests for independent samples of organizational environmental motivation. The analysis was conducted at the executive level (N=47). Table 2 shows that the strength of considerations having to do with public regulation and enforcement involved in certification (or in the adoption of environmental policy in noncertified firms) was lower among managers of certified firms (M=2.29, SD=1.46) than among managers of noncertified firms (M=3.43, SD=0.94). No significant differences were found among the other motivation indexes (p>0.05). The findings also indicate that for both groups public regulation and enforcement and environmental considerations were higher motivations than economic considerations.

Table 3 shows estimates of the linear regression for predicting the organizational environmental commitment according to the employees' perception, using the ISO 14001 certification variable and environmental commitment according to the executives' perception. Table 3 shows that the equation for predicting organizational environmental commitment according to the employees' perception was significant, and the explained variance was 42 percent. Among the predicting variables, the ISO 14001 certification variable was the one with the highest significant unique contribution to the explained variance (β=0.72). Based upon the beta coefficient and consistent with the second hypothesis, employees of ISO 14001 certified firms were found to have a higher perception of organizational environmental commitment than those of noncertified firms. The index of organizational environmental commitment based on the managers' perception contributed significantly and positively to the explained variance. The higher the organizational environmental commitment was according to the executives' perception, the higher the organizational environmental commitment was according to the employees' perception. This pattern was not found to be significant among employees of ISO 14001 firms.Footnote ¹⁹

Table 4 shows the linear regression estimates for predicting organizational environmental commitment according to employees' perception in ISO 14001 firms, using the ISO 14001 integration variable and the environmental commitment according to the executives' perception. Table 4 shows that the equation for predicting organizational environmental commitment based on the perception of all employees of ISO 14001 firms was found to be significant, and the explained variance was 32 percent. The ISO 14001 integration variable contributed uniquely to the explained variance (β=0.27). Based upon the beta coefficient and consistent with the direction suggested by the third hypothesis, we found that among employees with a high integration score the level of organizational environmental commitment according to the employees' perception was higher than that of employees with a lower integration score.Footnote ²⁰

We also examined the influence of the degree of ISO 14001 integration on workers' environmental commitment.Footnote ²¹ We found that employees with a high integration score had a significantly higher level of increase in their environmental commitment following certification (N=183, M=3.29, SD=0.76) than employees with a low integration score (N=152, M=2.08, SD=1.13).Footnote ²² This finding was consistent with Hypothesis 4.

Table 5 shows estimates of the linear regression for predicting OCB as measured by the OCB indexes, using the organizational environmental commitment according to employees' and executives' perceptions. Table 5 shows that in ISO 14001 firms the equation for predicting OCB based on the organizational environmental commitment was found to be significant in all three measures of OCB, and the range of explained variance was 7–9%. The organizational environmental commitment according to the employees' perception contributed uniquely and significantly to the explained variance (β's range: 0.13–0.20). Based upon the beta coefficients and consistent with the direction suggested by the fifth hypothesis, we found that as the perception of the firm's environmental commitment increased among its employees, so did the employees' OCB score in the three indexes (OCB–interpersonal behavior, OCB–job performance, OCB–civic virtue). The connection between these measures was significant only among employees of certified firms.Footnote ²³

Discussion

Our empirical findings lend support to the thesis that ISO 14001 can induce pro-environmental dynamic within certified firms. First, we found (consistent with Hypotheses 1 and 2) that the perception of the firm's environmental commitment among managers and employees of ISO 14001 firms was higher than the perception among their peers in noncertified firms. We also found (consistent with Hypothesis 3) that among employees of ISO 14001 firms, those with a higher integration score had a higher perception of organizational environmental commitment.Footnote ²⁴

Second, our results also indicate that the certification process may influence the attitudes of employees toward the environment and the firm. We found, first, that employees with a high integration score had a significantly higher level of increase in their environmental commitment following certification than employees with a low integration score. This finding lends support to the fourth hypothesis, which claims that the implementation of ISO 14001 is likely to enhance the employees' (internal) environmental commitment. By focusing only on the ISO 14001 group, this analysis has allowed us, in effect, to control for the impact of any pre-existing green ideology common to this group.

Further, we found a positive linkage—only among certified firms—between the perception of organizational environmental commitment among employees and their OCB (consistent with Hypothesis 5). This finding suggests that there was indeed something institutionally unique in certified firms. A possible explanation for this result is that certification makes the environmental issue more salient within ISO 14001 firms. Certification has a kind of internal reputation effect, which mirrors the external effect emphasized by Potoski and Prakash.

The analysis of the in-depth interviews with the firms' managers sheds further light on the structural impact of certification, demonstrating how the standard has increased the firms' sensitivity to environmental issues. The discursive analysis of the interviews demonstrates not only the breadth of the pro-environmental changes induced by the standard, but also the standard's innovative force as a catalyst for the installation of new technologies, and for the introduction of new production and operation techniques. The managers we interviewed also made consistent remarks about the positive influence of the system on the employees' environmental commitment. The analysis of the interviews with the managers also demonstrated that the organizational motivation for adopting pro-environmental policies was in part ideological and not merely economic.Footnote ²⁵

The empirical results support our thesis that the adoption of ISO 14001 can move the firm into a new equilibrium trajectory, which enmeshes together environmental and economic goals and reflects greater ecological sensitivity. ISO 14001 operates in this context as a social technology, which mediates between the environmental and economic dimensions. However, ISO 14001 does not offer a complete algorithm for resolving possible tensions between these competing dimensions. This issue was reflected in the interviews we conducted with the executives. Rather, ISO 14001 drives the organization to develop, through a process of continuous learning, ecologically “sensitive” mechanisms that could deal with such tensions. ISO 14001 can be viewed in that sense as inspiring a shift from myopic thinking—focusing on short-term profit maximization—into long-run thinking (Reference JensenJensen 2002:245).

The foregoing argument raises the question of the viability of the new (environmentally sensitive) organizational equilibrium (Reference ReinhardtReinhardt et al. 2008:219; Reference Lyon and MaxwellLyon & Maxwell 2008:241). The polyphonic model suggests that the stability of this new equilibrium stems from the capacity of ISO 14001 to unleash hidden social and economic resources. In particular, our findings highlight the capacity of certification to generate a self-supporting cycle between the firm's new environmentally sensitive structure and the employees' environmental and organizational attitudes. The contribution of ISO 14001 to the corporation's survival is not limited therefore to the standard's positive reputational effect (as emphasized by Potoski and Prakash).

More generally, our findings challenge some of the presuppositions that characterize the agency and transaction cost models and stakeholder theory. First, our findings challenge the idea that the internal dynamic of firms is determined entirely by the idiosyncratic logic of profit maximization. Our findings lend support to the idea that firms are polyphonic creatures, which may be driven by a plurality of logics and discursive streams. In contrast to the stakeholder model, which considers stakeholder claims as “external inputs” to internal managerial decisions (Reference GunninghamGunningham et al. 2004:326–8; Reference Donaldson and PrestonDonaldson & Preston 1995:75), the polyphonic model highlights how different discursive themes—ecological or economic—are woven into the organization's programs and routines, thereby influencing the organization's intrinsic communicative dynamic.

The polyphonic model also criticizes the attempt of the agency and transaction cost models to study the internal dynamic of organizations solely through an individualistic lens. It emphasizes, in contrast, “the role of institutions and institutionalization in the understanding of human actions within an organization, social order, or society” (Reference March and OlsenMarch & Olsen 1998:948). Indeed, this study has highlighted the fact that as contexts of identification, trust, and commitment, organizations can deeply influence the state of mind and behavioral choices of the individuals associated with them (Reference Ghoshal and MoranGhoshal & Moran 1995:15; Reference AllenAllen 1993:1401–3).

It is appropriate, in conclusion, to consider several methodological limitations of the study and to highlight potential avenues for future research. As noted above, our findings demonstrate a significant association between certification and various pro-environmental attitudinal factors within the managers and employees in our sample. These findings, we argue, can be interpreted as indicators of ISO 14001 independent causal power in instigating pro-environmental processes within certified firms. Arguably, there might be a possible problem of endogeneity involved in the research design. That is, some of the observed and unobserved factors that influence firms' decision to join ISO 14001, such as the type of business in which they engage or pre-existing institutional or managerial support for the environmental cause, may also affect their institutional and pollution variables post-certification (Reference Prakash and PotoskiPrakash & Potoski 2006:157; Reference BorckBorck et al. 2008).

We employed several methodological techniques in order to deal with the question of endogeneity, combining both discursive and statistical analysis.Footnote ²⁶ These techniques provided a reasonable basis for determining that ISO 14001 had an independent causal impact. Nonetheless, our empirical work constitutes only a first step in analyzing the sociological and psychological processes that take place in firms implementing EMSs. We believe that more effort needs to be made in order to further study the intricate sociological and psychological processes that take place within organizations that adopt environmental self-management schemes. Below we sketch several directions for future research (responding to some of the limitations of our study).

First, studying the structural impacts of certification and the linkage between these structural changes and the attitudes of employees requires longitudinal studies that will examine the dynamic of certified firms over time (against appropriate samples of nonparticipants). It would also be important in this context to gather relevant precertification data, referring, for example, to the firm's (and its employees') environmental commitment. Second, it will be interesting to explore the relation between the environmental commitment variable and other variables that may influence employees' commitment to the organization, such as the firm's policy on gender equality and other factors influencing the work experience. A further valuable extension will be to assess the employees' environmental commitment through richer measures of pro-environmental orientation, such as the New Ecological Paradigm Scale (Reference DunlapDunlap et al. 2000; Reference SchultzSchultz 2001). Fourth, another fruitful direction will be to compare between ISO 14001 and other voluntary initiatives such as Responsible Care and the Forest Stewardship Council scheme. Finally, it will also be interesting to link between the attitudinal measures used in our study and eco-physical or compliance indicators.Footnote ²⁷

Policy Implications

Our study highlights the capacity of ISO 14001 to instigate a pro-environmental dynamic within certified firms. Our results are consistent with the findings of a large number of studies, which have found that ISO 14001 positively influences the environmental performance of subscribing organizations.Footnote ²⁸

The findings of this and other studies that have examined the environmental efficacy of ISO 14001 justify the development of a regulatory program that will encourage firms to adopt the ISO 14001 EMS. Underlying this policy recommendation is the potential gap between the initial stage in which a firm considers whether to go for certification, and the second stage, that of implementation of the ISO 14001 EMS. Our study lends support to the idea that certification can move the organization into a new and more environmentally friendly equilibrium, irrespective of its prior ideological commitments. Since the certification decision is governed by a combination of economic, ideological, and legal considerations, firms that believe that the cost of certification is higher than the associated benefits or are not ideologically “green” may avoid certification, depriving society of the ecological benefits associated with certification. This phenomenon can also reflect a certain cognitive bias on the part of top executives, who may fail to recognize the potential virtuous cycle between certification and the employees' attitudes. The gap between the private considerations affecting the initial certification decision and the public benefits associated with certification constitutes the basic justification for providing regulatory incentives for certification; it could also justify requiring firms with a high-risk profile to obtain certification.

A regulatory scheme seeking to encourage the adoption of EMSs should provide substantial benefits to certified firms. We believe that the EU EMAS scheme constitutes a useful model in this context.Footnote ²⁹ Programs of environmental excellence, which include an in-built requirement for EMS, exist also in the United States and Canada (Reference BorckBorck et al. 2009), although they seem to reflect a more cautious approach in terms of the incentives they provide to participating firms.Footnote ³⁰

Our policy proposal is somewhat incompatible with the current calls—post the 2008 financial crisis—for “re-regulation” (Reference CrookCrook 2008; Reference MandelMandel 2008). These calls reflect skepticism with respect to the capacity of self-regulatory programs to achieve regulatory goals. We do not think that the events of 2008 justify a complete rejection of the self-regulation model. Such rejection would both disregard the creative and pro-social capacities of individuals and organizations and overstate the social-engineering capabilities of regulators. However, we do recognize that self-regulation schemes cannot replace the public regulation system.Footnote ³¹ They should also be highly selective in their design and the domain to which they are applied.Footnote ³² Further, self-regulatory schemes should also contain mechanisms that will discourage strategic manipulation of the scheme by participating firms (e.g., joining the proposed ISO 14001 scheme in order to gain regulatory rewards, but without a genuine commitment to implement the ISO 14001 EMS).

A program encouraging firms to adopt ISO 14001 should therefore include elements responding to these concerns. A proper regulatory response should be based, we suggest, on the following three pillars: a requirement to publish an annual environmental statement (preferably according to the Global Reporting Initiative Sustainability Reporting Guidelines), a requirement to engage in meaningful internal and external dialogue, and the development of closer cooperation between national regulators and national accreditation bodies in supervising the work of EMS auditors.Footnote ³³ This threefold strategy should both provide an incentive for organizations to incorporate more demanding environmental goals and strengthen the monitoring and reflexive components of the ISO 14001 system (reducing the capacity of firms to use ISO 14001 as a mere “green wash” instrument). The advantage of this strategy is that it does not interfere directly with the decisional autonomy of certified firms, remaining faithful to the ISO 14001 self-regulatory spirit. The EMAS scheme includes several components that respond to these concerns and could therefore serve as a template for other environmental regulators.Footnote ³⁴